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Around 80% of the BNPL Market revenue in UAE was generated by Online mode of payment fueled by the Covid-19 pandemic: Ken Research

    Richa Sharma

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    1.  The Covid-19 pandemic is a driving force in exhilarating and paving the way for newer companies to enter the BNPL space in the country, in addition to external investments made in the industry

    The inception of Digital Economy

    In recent years, the UAE has seen a significant increase in digital transactions Because of the rise of e-commerce in the region, inter-governmental partnerships are being formed in order to make the UAE a digital hub. This is one of the major factors contributing to the rise of digital credit lending in the country, such as that of BNPL. Government support is also playing a significant role in the UAE's surging digital penetration. Additionally, BNPL players in the UAE have only just entered the market and have cumulatively received approximately $40 million+ in funding which is likely to boost the BNPL services in the country.

    2.  Buy Now Pay Later industry in UAE has gained significant traction growing at a CAGR of ~92% in between 2019 and 2022

    Buy Now Pay Later market in UAE at a CAGR of 92%, 2019-2022

    The Buy Now Pay Later industry in the UAE generated multi-million dollars in revenue in 2022, growing at a CAGR of 92% between 2019 and 2022. The UAE BNPL market boomed during the COVID-19 pandemic because a large portion of the residents lost their jobs during this period and was surviving on their savings, which pushed for the need for an extra credit line, which BNPL services catered to. In 2022, the 30-40 age group was having the largest market share for BNPL services in the country. This is due to the growing working-age population, which is gradually shifting away from credit cards and toward BNPL as a mode of payment.

    3.  With an increasing consumer base and expanding partnerships with merchants and retailers, the country's BNPL players have seen a boom in a short period of time

    Key Trends of UAE BNPL Industry

    The Middle East region has seen an increase in the number of companies offering BNPL solutions in just one year. They are making a name for themselves by adding value to merchants and providing simple financial products to customers. With so much going on at BNPL, its user base is making significant strides as well. With the decreasing impact of Covid-19, we are also seeing the return of offline shopping mode. The BNPL players will not pass up this opportunity. They have already begun collaborating with leading retailers to offer BNPL as a point-of-sale financing tool in physical stores at checkout points.

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    4.  Credit recovery, combined with customer overspending, is posing a significant challenge to the expansion of the BNPL market in the UAE

    expansion of the BNPL market in the UAE

    BNPL service providers face the risk of being unable to recover loan amounts that customers fail to pay on time. Although there is a carry forward charge attached to late amounts, it may continue to accumulate on the consumers' part. Regulators are concerned about the rising indebtedness and risk to consumers as the BNPL market expands rapidly. Moreover, unwise purchases are becoming more common as a result of unsecured credit risk assessment using these methods. The risks associated with the region's competition are also extremely high. Companies in the nascent or growth stage need to figure out multiple revenue streams and different methods of financing such as a card, cashback, and loans or quick financing to survive the competition.

    For more insights on the market intelligence, refer to below link:-

    UAE Buy Now Pay Later Industry